Europe close: Investors play it safe ahead of French elections

Polls showing French Far-Left presidential candidate Jean Luc Melenchon was continuing to win new backers with just under a week before the first round of voting saw investors duck for cover, with news of snap general elections in the UK adding a large dose of volatility.

The benchmark Stoxx Europe 600 index fell 1.11% to 376.35, while Germany’s DAX retreated 0.90% to 12,000.44 and France’s CAC was 1.59% weaker at 4,990.25.

Meanwhile, Brent crude fell 0.80% to $54.92 per barrel and West Texas Intermediate was down 0.47% lower at $52.40.

The Stoxx 600's gauge of Basic Resource firms paced Tuesday's decline, falling 3.11%, alongside a 1.99% drop for Oil&Gas as Construction stocks gave back 1.45%.

Christine Lagarde, the head of the International Monetary Fund warned of "rising uncertainty" from the French presidential election race as it entered the final stages for the first round of voting on Sunday.

Lagarde said that the election was creating a "huge question mark" over the Eurozone, with one of the largest partners of the currency bloc “wondering if its destiny and fate is in or out of the group”.

Long-time frontrunners centrist independent Emmanuel Macron and Marine Le Pen are expected to reach the final run-off on 7 May, Mélenchon could disrupt proceedings after making a late charge.

Both Melenchon and Le Pen are eurosceptic and hostile to European institutions.

Holger Schmieding, chief economist at Berenberg, said: "Although Mélenchon remains behind the two top contenders Macron and Le Pen, he still has a little momentum on his side. With around 30% of French voters still undecided, any of the four major candidates could make it into the run-off round on 7 May. In most polls, the gap between these four candidates is now within the margin of error."

Elsewhere, Prime Minister Theresa May called a snap general election for the 8 June, pending the repeal of the Fixed Term Parliament Act in Parliament.

Investors were also mulling other geopolitical risks, with Turkish president Recep Tayyip Erdoğan winning Sunday’s referendum on granting him more presidential powers and rising tensions between the US and North Korea.

In corporate news, stock in Ashmore Group was down 2.23% despite saying it returned to net inflows into its funds in the three months to the end of March as investors regained confidence in emerging markets.

Miners were pulled lower after iron ore prices fell to their lowest level in five months. ArcelorMittal fell 6.18%, Glencore was 5.58% lower, Tenaris was down 3.40%, and Antofagasta declined 3.41%.